Renewed Push on Pell

Submitted by Doug Lederman on February 1, 2010 - 3:00am

College leaders grew understandably nervous when President Obama said last week that he would freeze domestic discretionary spending for the rest of his administration; programs dear to them, like student aid and scientific research, fall into that broad category, and his State of the Union vow to shield education programs provided too-little reassurance.

But despite the overall freeze, it appears that the $3.8 trillion budget the White House will release today will reinforce the message Obama has delivered repeatedly: that "[i]n the 21st century, the best anti-poverty program around is a world-class education."

An administration official confirmed Sunday that the president's budget for the Education Department would increase the maximum Pell Grant to $5,710 from the current $5,350 and make the grants an entitlement (available to all students who qualify for them) -- steps that would add a million students to the program's rolls. If Congress were to approve the change, the administration would have nearly doubled its spending on the grants in its first two years in office -- to $34.834 billion from $18.181 billion in the 2008 fiscal year.

Meanwhile, The New York Timesreported[1] that the budget would also provide increases for civilian research programs (which university officials had feared might face cuts given Obama's vow to shield education programs). The Times reported that the National Institutes of Health, the National Science Foundation and the Energy Department's Office of Science would see increases, though it offered no details.

And public colleges could also benefit, indirectly, from another budget initiative the Times described in passing: "$25 billion for cash-starved states," which could give state leaders some financial flexibility that could help ward off, or at least minimize, cuts to higher education.

The proposed increase in the Pell Grant, as well as the expansion of income-based repayment for student loans that the president previewed in his State of the Union speech[2], is certain to be dependent on Congress's passage of legislation to remake the student loan programs. The Obama administration proposed that restructuring last year, in its 2010 budget, but while the legislation passed the House of Representatives[3] last fall, Senate leaders have yet to introduce the bill, which has remained stuck behind health care on the Senate's priority list.

The Student Aid and Fiscal Responsibility Act, as the measure is known, would end origination of student loans through the lender-based Federal Family Education Loan Program, saving tens of billions of dollars from the shift to the competing direct loan program. The Obama administration's 2010 original budget plan also called for making Pell Grants a federal entitlement, but administration officials slowly backed away from that promise as 2009 wore on -- amid suspected opposition from Congressional appropriators, who bristled at the loss of their authority over such a significant portion of the annual education budget.

The idea of a Pell entitlement is appealing to the department, and to many student aid officials, because it would ensure a guaranteed stream of money for students, shielded from the whims of budget cycles and annual political fights in Congress. Under the administration's plan, the maximum grant would be set at $5,710 in 2011 and grow by by the rise in the Consumer Price Index plus 1 percentage point.

Making Pell Grants an entitlement would also eliminate what has become an annual, and escalating, ritual: the need to find billions of dollars to offset the inevitable shortfalls that emerge between what Congress appropriates for Pell Grants each year and the amount that students actually use. The current shortfall, administration officials conceded in December[4], is $18 billion, and it remains unclear whether and how Congress plans to find the funds to close it, or if instead the administration will aim to eliminate the shortfall through the 2011 budget plan it will release today.

More detailed information about the White House's 2011 budget blueprint will be available on this Web site Tuesday.